Zero One: Got Digital Talent? Probably Not

In the new digital reality, every company must be a software company. But most can’t recruit the right talent and will look to local channel partners for help.

Aug 08, 2017

Line-of-business execs (LOBs) want to fill their talent roster with techies who can react quickly to digital disruption. Sounds grand, but there’s a problem. LOBs are jumping into a battle for talent they’re not likely to win. And a lack of talent will put a screeching halt to their digital transformation plans.

There’s no question that industry-wide digital transformation has put a premium on certain technical skills in an already small talent pool. Even CIOs struggle to recruit candidates. Sixty-five percent of CIOs said a skills shortage is holding them back, says Forrester, up significantly from last year.

Now LOBs who’ve traditionally been at odds with techies will be competing with CIOs for their services. LOBs in vertical industries such as retail, financial services, manufacturing and others are building digital products to ward off disruption. It’s why business luminaries, from GE’s Jeff Immelt to Microsoft’s Satya Nadella, have proclaimed that every company must now be a technology company.

“Looking beyond their internal IT departments, LOBs are staffing their own departments with people in IT-oriented job roles,” writes Carolyn April, senior director of industry analysis at CompTIA, in a report. “CFOs, CMOs and other LOBs in the study say they have dedicated technology roles within the walls of their departments, including everything from data scientists to business analysts to software developers.”

Software developers present an especially difficult position to fill with nearly 61,000 postings last month – more than the combined total of the next four tech categories. The U.S. Bureau of Labor Statistics says the country will need around 500,000 new software developers over the next 10 years, replacing retirees and serving companies that want to build software as part of their go-to-market models.

Given graduation rates in computer science, there will be just enough to fill this demand if candidates are equally distributed around the country as needed, says Forrester analyst Jeffrey Hammond in a podcast. Of course, that’s not realistic.

“Software developers, millennials in particular, want to congregate, flock to certain cities. They want to go to the coast,” Hammond says. “This issue of local demand vs. local supply once again rears its ugly head.”

A few years ago, geography didn’t matter much. CIOs would offshore software development to service providers in, say, India or Eastern Europe. But given the speed of digital business, LOBs need the development team practically on site. Eight-hour time differences don’t work well in the digital world.

“If you’re trying to deliver a new mobile application every two weeks or create a connected product or you’re trying to very quickly get customer feedback and implement that in your solution, you need your implementation team local or at least in the same time zone,” Hammond says.

Local time zones aside, LOBs also face a “Foosball challenge” when recruiting technical talent. That is, many businesses don’t foster a workplace culture that appeals to IT people. Technical work, especially software development, is intense and creative, which is why many offices in Silicon Valley have a relaxed atmosphere and fun spaces for work breaks. Tech workers also want employers to offer training paths on the next new thing, such as mobile development.

LOBs will have to create this environment to attract tech talent.

Moreover, LOBs might be surprised at the salaries top tech talent commands. The mean wage for an application developer is around $95,000, Hammond says. A top-tier graduate from MIT or Stanford University will start at anywhere from $110,000 to $120,000 plus benefits.

Channel partners can take advantage of these trends by filling the talent gap – that is, only if they can successful recruit talent themselves. Rather than compete with cheaper offshore competitors, smaller channel partners can play to their local advantage. They can bring teams of developers together at the client site or their own.

Of course, channel partners also must recognize that the kind of outsourced work in demand has changed. Requirements-based, fixed-bid projects are no longer en vogue, giving way to high-touch, business transformation ones.

Both re-engineering work and the local advantage go hand-in-hand.

“I don’t see companies being able to do that if they’re not at least down the street from their clients and development shops,” Hammond says. “It changes the nature of the types of engagement, and I think it’s one of the reasons you see so many of the large systems integrators buying agency talent as quickly as they can.”

Based in Silicon Valley, Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. You can reach him at [email protected]